Obama's Not-So-Secret Medicare Plan

Republicans could learn a lot by visiting the White House website

February 22, 2013

I have a big scoop, straight from an extremely reliable White House source: The Obama Administration has endorsed means-testing of Medicare.

For some time now, Republicans have been saying that wealthy seniors should pay more for Medicare. "You know Warren Buffett's always complaining about not paying enough taxes," Senate Minority Leader Mitch McConnell said last month on "Meet the Press." "And what I'm complaining about is we're paying for his Medicare. We ought not to be providing these kinds of benefits for millionaires and billionaires." New York Times columnist David Brooks seconded the plea in the New York Times today. Apparently Obama has been listening. According to my administration source, the president would support means-testing.

Huge news! And who was my reliable source? The White House website. See, this isn't a new proposal. It's part of last year's budget. And the administration has reaffirmed, as recently as yesterday, that the budget offers remain valid in discussions over how to replace the budget sequestration cuts set to take effect on March 1.

Increase Income-Related Premiums Under Medicare Parts B and D. Under MedicareParts B and D, certain beneficiaries pay higher premiums as a result of their higher levels of income. Beginning in 2017, the Administration proposes to increase income-related premiumsunder Medicare Parts B and D by 15 percent and maintain the income thresholds associatedwith income-related premiums until 25 percent of beneficiaries under Parts B and D are subject to these premiums. This will help improve the financial stability of the Medicare program byreducing the Federal subsidy of Medicare costs for those beneficiaries who can most afford them. This proposal will save approximately $28 billion over 10 years.

Allow me to translate: The administration would take two steps. It would ask wealthy seniors to pay higher premiums than they do now. Then it would freeze the income threshold at which those higher premiums kick in. Over time, as incomes rose naturally, more and more seniors would end up paying the higher premiums—until, under the administration's proposal, one-quarter of all seniors were paying the surcharge. If you do the math, as analysts at the Kaiser Family Foundation have, you'll see that it would eventually mean every senior making more than $47,000 a year in today's dollars will be paying higher premiums. The change would raise only $28 billion for the next ten years. But it would probably save much more—over $100 billion—in the following decade.

But the failure to recognize, or at least acknowledge, that the administration has already proposed serious means-testing is widespread in Washington—and emblematic of a broader truth in the budget debate. The administration has proposed serious compromises, the kind that makes liberals like me squeamish. And while plenty of Democrats don’t like them, plenty would go along with them, if—and only if—they are part of a deal in which Republicans are making equal concessions. But Republicans aren't doing that. They oppose raising any more revenue, and they want to replace existing cuts to the Defense Department with yet more cuts to social programs. No deal is possible until Republican behavior changes. And that behavior won’t change as long as it escapes notice.